Universal Music Group First-Half Earnings Up 6.7% As Streaming, Subscriptions Climb 34%

Universal Music Group

UNIVERSAL MUSIC GROUP showed a modest 6.7% in earnings for the first half of 2015, largely fueled by revenue from streaming and subscription services growing 34% year over year. Digital income claimed more than 50% of company revenues, outperforming physical sales (down 7.4% at constant currency), downloads (down 5%) and licensing (up 16.4% on the same basis) combined. 

Over all, UMG's revenues (including merchandising and music publishing) rose 3.1%, to €2.31 billion in the first six months of 2015. Without taking into account changes in foreign currency exchange, revenues were up 15.4%.

Through June 30, UMG's income from operations was €179 million, up 8.5% at constant currency and up 12.5% on an actual basis. Earnings before interest, taxes and amortization (EBITA) was €171 million, up 6.7% at constant currency and up 11.9% on an actual basis.

Recorded music revenues grew 3.6% at constant currency with the help of UMG's share of the $210 million settlement won by record labels from SIRIUSXM RADIO regarding performances of pre-1972 recordings.

Driven by streaming and subscription revenue increases, UMG music publishing revenues grew 2.7% at constant currency, while merchandising and other revenues grew by 3.2%.

UMG revenues increased 4.3% at constant currency to €1.2 billion, while EBITA fell 11.5% at constant currency to €89. In the second quarter, WARNER MUSIC GROUP's revenue was down 1%, while SONY MUSIC's revenue declined 3% at constant currency.

The five top money-earners were TAYLOR SWIFT, the "50 Shades Of Grey" soundtrack, SAM SMITH, DRAKE and MAROON 5.

Thanks to UMG, VIVENDI's revenue rose 8.3% to €5.1 billion, but just 2.4% at constant currency. Income from operations declined 1.4%, or 3.1% at constant currency. Earnings before interest, taxes and amortization (EBITDA) increased 13.4%, or 11.2% at constant currency and perimeter.

VIVENDI is aiming to become a pure-play media company focused around UMG and the CANAL+GROUP, while also making a concerted effort to increase their presence in digital and new markets. It acquired a 90% stake in YOUTUBE competitor DAILYMOTION (NET NEWS 6/30) and operates a group of entrepreneurial companies under the VIVENDI VILLAGE umbrella.

At the same time, Vivendi is getting out of the telecommunications business, hoping to use the proceeds to acquire the controlling share in the CANAL+ GROUP from SECP.

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